The export credit agency says it can provide export guarantees to non-oil exporters to substitute banks’ letters of credit at a time when the economy is saddled with mounting economic and banking restrictions imposed by the United States.
“We have asked president to authorize EGFI to move on a path separate from the banking system regarding export guarantees,” Afrouz Bahrami was quoted as saying by IRNA.
Commenting on problems exporters of technical and engineering services face in receiving bank guarantees, she said Iranian technical and construction firms working overseas need binding guarantees to be able to participate in international tenders, Financial Tribune reported.
“Due to the fact that Iranian banks are under sanctions, foreign employers do not accept Iranian banks guarantees,” she said, adding that in the absence of bank guarantees, the EGFI supports non-oil exporters.
Bahrami spoke of a model undertaken to ease the troubles of exporters of technical and engineering contractors working overseas, based on which EGFI will issue the guarantee for a peer fund in the target country.
Positive Results
The peer fund accepts the counterpart’s guarantee, and in turn, issues a corresponding guarantee for the bank inside the target country to be finally granted to the employer.
“The model has been implemented in some countries and produced results,” she said.
Bahrami underscored foreign employer have mixed attitude toward guarantees issued for Iranian exported goods and services, noting that some employers only accept bank guarantees while others prefer EGFI.
Foreign contractors are mainly concerned about banking transactions, she recalled.
To address these concerns, the private sector has proposed the President grant the EGFI extra authority to use alternative ways to the banking sector.
She pointed to a similar letter by the Ministry of Industries to the president, noting that the issue is to be discussed in a meeting between the High Council of Economic Coordination - an ad hoc decision-making body comprising three branches of the government.
EGFI was established in 1973 as the first export credit agency in the Middle East and North Africa region. The state-owned body, affiliated to the Ministry of Industries, Mining and Trade, promotes Iran’s non-oil export by providing Iranian companies export guarantees and insurance to cover export risk.
According to media reports, EGFI is able to cover export risk to the tune of $2.3 billion or 5% of the nations;v$40 billion non-oil export market.